July 29--WEST CHESTER TWP -- AK Steel's plants shipped more tons of steel from April to June compared to the same time period a year ago, trimming the Butler County's steelmaker's net losses reported Tuesday.
However, higher sales were offset by the lingering effects of a harsh winter on the supply of iron ore, a key raw material, according to the company.
As a result, West Chester Twp.-based AK Steel Holding Corp. said Tuesday it recorded a net loss of $17.1 million for the second quarter ending June 30. A year ago, the net loss was $40.4 million.
An unexpected blast furnace outage at steel plant Ashland Works in Kentucky hurt sales in February and the whole January through March quarter. Sales picked back up after the plant started running again.
Results for the last three months reached $1.53 billion in sales on approximately 1.4 million tons of steel shipped, compared to year-ago sales of $1.4 billion.
But the gains were offset by extreme winter weather conditions that iced over the Great Lakes. As a result, the available supply of iron ore to the steel industry from April-June was less than had been anticipated, according to the company. AK Steel said it was forced to reduce production rates at its blast furnaces including Ashland and Middletown Works to match production levels to the available supply of iron ore.
"We experienced meaningful improvements in virtually every aspect of our business in the second quarter as compared to the first quarter of 2014," said James Wainscott, chairman, president and chief executive officer of AK Steel, in a statement. "Despite facing some significant challenges in the second quarter, on an adjusted basis, we earned net income and we are well-positioned for a much better third quarter and second-half of 2014."
Looking forward, Wainscott also told investor analysts Tuesday in discussing results that an acquisition of a Michigan steel plant announced July 21 would boost earnings in 2015.
The $700 million deal will provide AK Steel increased scale and enhanced operating flexibility, Wainscott said. Not only will a new steel plant increase the company's steel output, but it's expected to create money-saving opportunities from production, transportation and supply purchasing efficiencies, he said.
Additionally, AK Steel got a good price on the acquisition from Severstal, still subject to regulatory approval. That $700 million price is approximately $1 billion less than the Dearborn plant's original purchase price and subsequent investments to upgrade the facility, he said.
"AK Steel's acquisition of Severstal Dearborn will make us a better company. It will further strengthen our position as a premier North American steel manufacturer and complement our existing carbon steel operations," Wainscott said.
"It's an attractive investment opportunity for AK Steel."
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